PLEASE SHOW WORK

Part 1: You have a one-year zero coupon bond that pays $1,000 which price today is $909.09. You have a two-year coupon bond with a principal value of $2,000 and coupon rate of 10%. Its price is $1,845.334. Determine what is the term structure of interest rates for years 1 and 2.

Part 2: Compute the duration for the coupon bond and for the zero coupon bond and explain how to compute the yield to maturity (only set the equation in the last case) for the coupon bond.

Part 3: Assume the YTM for the coupon bond is 14.74%. What is the modified duration for the two bonds? What would the new price of the two bonds be if the yield increases by 5%?

Part 4: You bought a put to sell these bonds today at $900 and $1,500 for the zero-coupon bond and the coupon bond, respectively. What is the payoff from this put option?